Flood Risk Assessment: Tips for Home Buyers

Tom Saab, broker/owner of Tom Saab Real Estate in Methuen and Salisbury, knows firsthand the havoc northeast winds can wreak on waterfronts. He has sold, leased, developed and owned properties along Salisbury Beach since 1971. He has since remembered the names and dates of every major storm that affected his beloved beach.

He’s seen everything and he’s not going anywhere.

He said storms in December 2023 decimated sand dunes in front of his properties and others that abut Salisbury Beach State Reserve, leaving their homes vulnerable to damage. He said the state has refused to rebuild the park’s dunes, located between homes and the ocean.

“They refuse to help us and as a result when the January storms hit we were hit,” he said. “That’s why we then had to buy $600,000 worth of sand and rebuild the dunes ourselves.”

On March 11, three days after the work was completed, another nor’easter swept through and took away about half of this sand. He and other Salisbury Beach Citizens for Change volunteers were handing out bales of dune grass and rolls of snow fencing to neighbors while they were interviewed for this story. The hope is that the snow fence will catch and collect the wind-blown sand and the dune grass will help keep it there. The group is hoping for a long period without a major storm to allow the dunes to regenerate.

“I’m rooted in this beach,” he said. “It’s a phenomenal beach. Nobody wants to leave Salisbury Beach. It is a spectacular beach which, at low tide, extends for 100 meters. … Our rentals were already 80 percent booked for the summer season and April 1st.

And of all the homes along the 3 miles of beach, there were only three for sale at the time of this interview, suggesting his neighbors aren’t heading for the hills just yet.

Going a little further inland is no use

Davidson O. Calfee is owner/president of Arthur D. Calfee Insurance Agency in Falmouth. His concern? The further you get from the beach, the less people worry about flood damage, he said. Hurricane Katrina destroyed his Mississippi home in 2005.

“Hurricane Katrina was a Category 5 hurricane that hit at high tide,” he said, “so there was a lot of water that was pushed a mile inland . And the National Flood Insurance Program (NFIP) has a limit of $250,000, which is the coverage required by most mortgages. This will certainly repair some damage, but it won’t be enough to rebuild most homes in Massachusetts.

There are also private companies that offer supplemental insurance, which he recommended. He said concerns existed about future premium increases for almost all types of insurance – to reflect the growing risks posed by more frequent and intense storms. Insurance companies are also becoming more selective about which properties they will insure, and lenders will not lend on properties that are not insurable.

“There’s a house one of my clients is trying to buy and I’m trying to get flood insurance,” he said. “And this has been denied by many of our carriers. So we really try to ensure them. I’m not going to say they can’t get flood insurance, because we’re not there yet, but if they do, they won’t be able to get a mortgage and won’t buy not ownership.

Joe Rossi, CEO of Joe Flood Insurance Brokerage, said there are at-risk properties that private flood insurance will struggle to insure at any cost. For these properties, risk mitigation is crucial.

“In terms of mitigation, there are many things that can be done, such as raising a house, removing items from vulnerable areas (like basements), and closing windows in a storm,” he wrote in a E-mail.

According to moneygeek.com, the average cost of flood insurance in Massachusetts is $1,305 per year, with Nantucket and Dukes counties paying the highest premiums: $1,821 and $1,999, respectively. And don’t think that moving inland mitigates all your risks. Watch how “catastrophic” flooding devastated the town of Leominster last fall. In Worcester County, the average cost of flood insurance is $1,624, which is $111 more than in seaside Plymouth County.

Will Massachusetts experience the exodus of insurance companies that Florida and California experienced? No, the Globe reported in September, “although home insurance companies are surely taking notice of climate change when they issue new policies, which could affect premiums.”

What should a real estate agent tell you?

According to Catherine Taylor, director of education and associate attorney at the Massachusetts Association of Realtors:

“A real estate license is required to disclose any fact the disclosure of which may cause the buyer or potential buyer not to complete the transaction (Chapter 93A, 940 CMR 3.16(2)). Flood insurance is a lender requirement, so this would be an important discussion the buyer should have with their lender if they are considering purchasing the property with a mortgage.

“No law specifically requires disclosure of whether the property is in a flood zone, but Chapter 93A requirements and regulations require disclosure of prior flooding or whether the property is in a flood zone if it is a fact known to the holder of the real estate license. As with other types of disclosure, even when affirmative disclosure is not required, if a potential buyer asks a direct question, a truthful answer must be provided.

“The law requires that necessary disclosures be made before the parties enter into a binding contract for the purchase of the property. Although the MLS is a useful tool for ensuring that these disclosures are made, it is not necessary for a disclosure to be included with the MLS listing information itself.

Research is the best protection against flood damage

Rossi said Federal Emergency Management Agency maps are helpful, but determining your true flood risk requires a mix of public resources such as Floodfactor.com, asking community members which areas are flooded and understand a property’s flood and claims history.

Adrianne Hanley is a vice president at Compass and helps people buy and sell oceanfront properties. She said she learned early in her career to do due diligence to determine if there is a risk of flooding on the properties that its clients buy or sell.

“It was one of the houses on the avenue in Scituate, and it wasn’t on the water,” she said. “Actually, it was far from the water. I walked into this house, and everything was new, and it was a very young couple, and they said they wanted to sell to be closer to the city.

They quickly struck a deal with a buyer – who backed out three days later after discovering via Facebook that the sellers had had to be rescued from the house by boat a few years earlier. The owners blamed Hanley and fired her.

“I learned a hard lesson, but you have to be honest with everyone,” she said. “We need to explain the risks of living near water,” she said. “You know these houses on stilts? I just think, ‘Why would you buy this? I’m very honest with my opinion on this. Some properties I see with my clients, and I tell them ‘I want you to know it’s flooding,’ and a lot of times they go anyway.

The Commonwealth offers a free downloadable Homeowners Handbook to prepare for coastal hazards: seagrant.whoi.edu/wp-content/uploads/2020/07/MA-Homeowners-Handbook-2020-1.pdf.

Jim Morrison can be contacted at (email protected). Follow him on @jimmorrison617.